For your night out (1957)

Film Review from the October 1957 issue of the Socialist Standard

If you have five shillings to spare, go and see "The Witches of Salem"—it might come off soon. Even if its title does not sound very interesting, this new French film is unique. A gripping drama—reminiscent of Ibsen at his best—it has everything the heart could desire: a most moving love story, a good deal of direct, down-to-earth sex; a vivid portrayal of puritan life. More important is that you won't need to leave your critical faculties at home, for this is a movie that deals with the lives of real people. Always political, and an impressive study in mass psychology, it shows the struggle between rich and poor, between the Church and the people. One of those rare films that a Socialist should not miss to see. Script by Sartre, based on a play by Arthur Miller. Subtitles in English.

B. J.

Party News Briefs (1957)

Party News from the October 1957 issue of the Socialist Standard

Bradford Branch report a most successful outdoor meeting last month by Comrade Baldwin, at which two dozen S.S. were sold and some pamphlets. They express the hope of a repeat visit by Comrade Baldwin.

Comrade Gilmac in America. Comrade Gilmac has sent his first brief report from America, where he attended the Annual Conference of the W.S.P. in Boston. He reports that our comrades out there have been experiencing rather a thin time, but that this year’s Conference is the best they have had. The members are full of enthusiasm, and their hospitality to him has been overwhelming.

The Socialist Party of Ireland. Socialists in large cities such as London, Glasgow, Sydney or Boston—where there are often quite a number of Socialists—know how difficult it is to get workers to listen to, and accept, the Socialist case. But for Socialists where there are only small groups or even single individuals, it is much more difficult—particularly in countries like Austria or Ireland, where the Catholic Church is very powerful.

Our comrades in Dublin and Belfast have an extremely difficult task, but putting the Socialist case in Co. Kerry is almost impossible.

During August two members of Fulham Branch, Comrades Newell and Garnham, visited Ireland, and whilst there visited our only comrade in Co. Kerry, Comrade Tim O’Sullivan, of Coolcorcoron, a tiny village about two miles out of Killarney. Comrade O’Sullivan told our comrades that the only politically conscious people in the whole of Co. Kerry are the Sinn Feiners; and they are fanatical nationalists, living mainly in the past! But still our S.P.I. comrades, such as O’Sullivan and others in Ireland, are able to get something across. Besides their tongues they are armed with The Manifesto of the Socialist Party of Ireland, and copies of a free leaflet, Introducing the Socialist Party of Ireland.

The “Daily Herald” and the S.P.G.B. In reply to a letter previously published from a Labour Party reader, who enquired why it was that the Labour Party did not call itself the Socialist Party, the Daily Herald printed the following letter from a reader in Margate:

“It would be confusing and dangerous to re-name the Labour Party the Socialist Party, as this is the usual way in which people refer to a body already in existence —the Socialist Party of Great Britain.”

To which the Daily Herald thought it fit to add the following explanatory comment:

The S.P.G.B., which broke away from the Social Democratic Federation in 1904, has a membership of 1,100. It is sometimes called the Small Party of Good Boys. It stands for “uncompromising opposition to all forms of capitalism, including that in the Soviet Union.”

Phyllis Howard

Blogger's Note:

There is fuller report of 'Comrade Gilmac's' visit to North America in the November 1957 issue of the Socialist Standard.

The Manifesto of the Socialist Party of Ireland is available at the following link.

Declaration of Principles in French (1957)

From the October 1957 issue of the Socialist Standard

SPGB Meetings (1957)

Party News from the October 1957 issue of the Socialist Standard

Blogger's Note:

The Union Movement's 'E. J. Ham' mentioned above was Jeffrey Hamm, who eventually succeeded Oswald Mosley as leader of the Union Movement. There's a very brief mention of the debate in the December 1957 issue of the Socialist Standard. I'm presuming the debate passed without too much incident. There were 150 people in attendance.

Sting in the Tail: Capitalism obscene? Never? (1995)

The Sting in the Tail column from the October 1995 issue of the Socialist Standard

Capitalism obscene? Never?

Although the European Union still has its butter, beef and grain mountains, it destroyed nearly 3 millions tons of perishable food in 1993.

According to the Daily Mail (7 August), this consisted of apples, peaches, oranges, cauliflower, tomatoes and many other fruits and vegetables which were pulped as part of the EU’s policy of supporting farm prices.

Labour MP for Wallsend Stephen Byers declared “this is obscene”, a sentiment echoed by the Mail's editorial. But what both found “obscene” was the cost of this policy to “the British taxpayer”, which is only their way of describing British capitalism, and never, never the social system in which such insanity is rooted.

Pragmatism down under

The fiftieth anniversary of the end of World War Two was called VJ Day in Britain and America but not in all of Japan's wartime enemies:

“In many countries ‘Victory-Japan or VJ Day, has been quietly transformed into ‘Victory-Pacific’, or VP Day. In New Zealand and Australia the celebrations will be muted by the realisation that Japan is now the major trading partner and must not be offended. Elsewhere in the Pacific there is a reluctance even to acknowledge the victory " (Guardian, 7 August).

Australia changed the name because it “did not want to ruffle feathers with their greatest export market” while New Zealand was “concerned that the huge numbers of Japanese tourists who flock to its golf courses might take offence and disappear”.

In future, when Binyon's familiar "Lines" are spoken at remembrance services Down Under they should be changed to:

"They shall not grow old as we 

who are left grow old, nor the

 years condemn

   But at the going down of the

profits from exports and tourism

We shall remember on which side 

our bread is buttered."

They won't go away

During the Thatcherite 80’s we were assured that large chunks of the working class were being absorbed into an ever-expanding middle class which could look forward to a secure and prosperous future, and that the old conflict between capital and labour was dead.

Now, Larry Elliott has debunked this theory in the Guardian (21 August):

“Certainly popular capitalism seems to have lost its lustre. The middle classes, who believed their loyalty to the corporation meant a job for life, are living in fear of the sack. The skilled working classes have seen their homes repossessed. ”

He also notes that:

“There is no sense that management and workforce are on the same side, and why should there be, given the disparities of income and the knowledge that the redundancy notices will be handed out at the first sign of trouble. ”

Elliott concludes that all this, plus a growing awareness that most workers are “just one pay packet away” from penury, is fostering the belief that “we’re all working class now”. To paraphrase Mark Twain; reports of the death of the working class and the class struggle are greatly exaggerated.

Breathless business

If you ever wondered why it is that in a society capable of great scientific innovations and medical advances, some disorders never seem to be cured and, in the ease of asthma, become more widespread, then ponder the priorities capitalism puts on medical research. Rhone-Poulene-Rorer, a French/American enterprise that markets steroids, a second-line attack against asthma, plans to spend £1.7 billion, not in research to combat asthma but to buy out Fisons, a firm that produces a first-line attack, namely inhalers. Why this mammoth expenditure?

“Asthma is big business—a £6 billion world-wide market. It is growing rapidly, faster than the industry as a whole. And there is no cure. Just treatments’’ (Observer Business, 27 August).

So while asthma kills one Briton every five hours and more than 9 million suffer from it, including 2 million children, the big players are much more anxious to get a bigger slice of the “big business” than research means of beating the disorder.

Football and capitalism

The origins of football are obscure. Some claim that it was played in the Americas by the Plains Indians before the European invasion; others that it originated in Britain in the 14th century. But, whatever its origin, it is generally agreed that it was a healthy, enjoyable social activity. It was fun.

However, inside capitalism, a good example of what it has become is provided by Barry Hearn, the millionaire snooker and boxing promoter, who recently bought the football club Leyton Orient.

“I'm coming in with a great deal of experience in how to exploit sport, commercially and through the media. And I find this very motivating. Thats why I am in it: for me. You see I am not a football fan. I don't think I can sit through 90 minutes. It’s the business that's the buzz ’’ (Independent Magazine, 19 August).

The Great Minimum Wage Swindle (1995)

From the October 1995 issue of the Socialist Standard

The Labour Party's support for the concept of a minimum 
wage is not based on its concern for low-paid workers, in fact, Labour's real aim is to cut the expenditure, in the form of 
benefits, of the capitalist state it hopes to inherit.

The Labour Party went into the 1992 general election committed to introducing a legally enforced national minimum wage which, they said, would eventually amount to two-thirds of the level below which half all wage and salary earners fall (or the “median wage”, as the statisticians call it):

“Labour will introduce a national legal minimum hourly wage, starting at a level of 50 per cent of the mid-point of men's earnings (the median) . . . Four million people will benefit form this minimum wage. Over time, Labour will increase the minimum wage as a proportion of earnings to a point where no-one is paid less than two-thirds of the median male hourly rate ” (Looking to the Future, 1990, p. 37).

In today’s money this would give an hourly rate of about £5.50, or a minimum wage for a 39-hour week of £214.50, or over £ 11,000 a year. Of course there was never any chance that this was going to happen. You can’t legislate into being wage increases of this order, amounting in some cases to over 50 percent. Capitalism just does not work that way. Its economic mechanism responds not to government decrees but the realities of profit-making in competitive markets. The government could indeed pass a law aimed at ordering employers to pay a minimum wage at this level but, as this would cut into profits, the result in an economy based on the economic law of “no profit, no production” would be an economic downturn and a growth in unemployment.

Shrinking figures

The Labour leaders—who are nothing these days if not economic “realists”— were well aware of this. Which was why they proposed to reach the goal of two-thirds of the median only gradually, starting by introducing a law to fix the minimum wage at half it. This is the £4.15 or so to which Bill Morris and the T & G and other unions are still committed. But even this is pie-in-the-sky which will never come about, and wouldn’t have come about even if Neil Kinnock had entered Number Ten in May 1992. The economic mechanism of capitalism just won't wear it.

Since Kinnock went, Labour, first under Smith and then under Blair, has backtracked even further. It is still committed to the concept of a national minimum wage but not to any specific amount. This, they now say, is to be fixed by a commission made up of employers, unions and others and, we predict, would amount to about the same as the old Wages Councils, abolished by the Tories in 1993, used to come up with: about £3 or so an hour (in today’s money).

In other words, the most Labour would do would be to restore the pre-1993 situation, extending it to all industries and services so as to be able to call it a “national” minimum. This latter will only be window-dressing since most industries pay their workers above this hourly rate, otherwise they would have been covered by a Wages Council.

But why does Labour—now under arch-realist Blair—want to keep to the idea of a minimum wage, especially as it is going to earn them a lot of stick from the Tories? Since they now take the support of active trade unionists for granted, it can’t be a sop for their benefit. The reason lies elsewhere: it is part of their plan to reduce spending on welfare benefits as their contribution to trying to solve the fiscal crisis of the capitalist state.

A bit of theory

The basis of capitalism is the wages system, under which the work of production is done by people selling their particular ability to work to an employer in return for a wage or salary. Wages for particular types of skill are fixed by market forces at the amount of money workers require to buy the things needed to maintain their particular skill, plus an element to cover the cost of raising a family to replenish the labour force when they retire.

In the long run workers must get paid this amount, otherwise they won’t be able to maintain their skill, and their employer will begin to suffer in terms of absenteeism, increasing labour turnover, shoddy work and lower productivity.

So, in a sense, market forces—aided by pressure from unions—already tend to ensure that wages don’t fall below a minimum level: that below which the workers wouldn’t have enough money to maintain their skill adequately. However, there have always been some kinds of work—those requiring little training or experience and performed for a mass of small employers—where, because supply permanently exceeds demand, and because trade union organisation is difficult, market forces bring about a wage that is below this level.

What this means is that, in the terminology of Marxian economics, these workers get paid less than the value of their labour-power. They don’t get paid a “fair” wage even by capitalism’s standard of fairness, i.e. the full value of what they are selling.

This creates problems both for their immediate employers and for the employing class as a whole which has to foot the bill for the increasing ill-health and destitution that result from paying workers over a long period less than the value of their labour-power.

The problem for their immediate employers is that, even if they wanted to be a “good” employer and pay their workers the value of their labour-power as a means of getting their money’s worth in terms of work done and profits made, they can’t because of competition from other employers. None of them dares make the first move for fear of losing business, indeed of going out of business.

The solution that has been adopted in Britain has been two-fold. First, to introduce minimum wages in the trades concerned and, second, to introduce Family Allowances.

It was the Liberal government in 1909 that took the initiative and set up trade boards, later called Wages Councils, in the “sweated trades”, such as the retail trade, hotels and catering, and the rag trade, where workers tended to be persistently paid a wage below subsistence level. Under this system the employers, the unions and government officials met to fix a minimum hourly rate for the particular trade. It was an offence for an employer to pay below this rate. There was no national minimum wage, only different minimum wages for the different trades.

Subsidising employers

Family Allowances (now called Child Benefit) were introduced by the wartime coalition government in 1945. But, as the pamphlets Beveridge Reorganises Poverty and Family Allowances: A Socialist Analysis which we in the Socialist Party brought out at the time explained, this was not at all what it appeared to be: a money payment by the capitalist state which would leave all those with two or more dependent children better off by that amount.

Under capitalism and its wages system any regular payment received by workers in employment is going to have an effect on wage levels. This is because, as explained, wages tend to be fixed at a level which provides workers with enough money to buy what they need to maintain their particular skill in working order and also to bring up a family to take their place in the labour force when they are too old to work. If the state makes a contribution towards these costs, this means the workers’ immediate employer doesn’t have to.

The effect of any generalised state payment to workers in employment will be to depress, not necessarily the standard of living, but the wages paid by employers. This was why, in fact, Family Allowances were for a long time opposed by the trade unions. As we pointed out at the time:

"The real issue is not that certain unscrupulous employers may seek to save out of wages amounts paid in Family Allowances, but that once it is established that the children (or some of the children) of the workers have been ‘provided for' by other means, the tendency will be for wage levels to sink to new standards which will not include the cost of maintaining such children ” (Family Allowances, pp. 11-12).

In 1971 the then Tory government of Edward Heath breached a hitherto sacrosanct principle of the welfare state that no means-tested benefits should be paid to any worker in employment. They introduced a new benefit called Family Income Supplement (now called Family Credit), in effect a means-tested Family Allowance, payable to workers in employment whose income was below the poverty line, i.e. more or less what they would have got had they been on what is now called Income Support.

The logic behind this was to provide an incentive for people to take a job, however miserably paid. The result has been unsatisfactory from the point-of-view of the capitalist class as a whole. The cost of all state benefits payable to workers in employment (housing benefit, council tax benefit as well as Family Credit) has spiralled to over £2 billion a year.

Some employers—those in the modern sweated trades—have benefited. Knowing that the state will bring workers with children up to the poverty line they have been enabled to pay these workers below-the-poverty-lines wages. As Labour's deputy leader John Prescott has put it:

“Family Credit is now part of wage negotiations, with employers offering £1 an hour and saying: ‘I know you can‘t live on that, but if you nip down to Social Security, they’ll make up the difference (Observer, 28 August 1994).

Family Credit and other in-work benefits have, in other words, acted as a subsidy to these employers. This has caused resentment amongst other sections of the employing class who have to pay this subsidy out of taxes that, in the end, fall on their profits. This is where the Labour Party has come in with a proposal to help.

Labour to the Rescue

In their July 1995 campaign pack Low Pay. A Tory Failure, the Labour Party repeats again and again that their minimum wage is designed to reduce state benefits paid to workers in employment: 

“A minimum wage will not only act as a floor for pay. It will also ensure that in-work benefits do not act as a subsidy for low-paying and poor employers. ”

"Taxpayers would benefit because a floor under wages would reduce the need for tax handouts to low paying employers. Today employers have an incentive to lower wages at the taxpayers' expense." 

"Every taxpayer is now paying £100 a year for in-work benefits for people in low-paid work. People who have no protection against exploitative pay rates are forced into dependency on the benefits system whether they like it or not. And employers have no incentives to raise wages because they know the benefits system will subsidise the poor wages that they pay by what is, in effect, a tax handout to employers. ”

What Labour is proposing (and are rumoured to want to do over maternity pay) is what the Tories did over Sickness Benefit: to cut back on state payments by shifting a part of the cost on to employers in the form of statutory sick pay. Labour’s aim is to shift some of the burden of maintaining workers on low pay at the subsistence level on to the employers who have been benefiting from the present system.

But what about the workers? The low-paid workers existing on the poverty line. It’s not going to make much difference to them since the argument is about who is going to pay their subsistence income and in what proportions not about its level.

As far as the low paid are concerned what will happen is that what the right hand gives away in the form of a slightly higher minimum wage for some the left hand will take away in the form of reduced Family Credit. People on Family Credit get their benefit reduced by 70p for each £1 by which their income increases. So if their hourly wage was increased from, say, £2.50 to £3 they would only be 15p an hour better off not 50p. And if the increase lifted their income above the qualifying level for Family Credit they would find themselves worse off through losing the accompanying entitlement to housing benefit and free prescriptions and dental treatment.

Labour’s national minimum wage is not a genuine reform in the sense of a measure to bring about some improvement in working class conditions. It’s an economy measure designed to save the capitalist state money. They don’t fool us. Let’s hope that they don’t succeed in deceiving too many of the low paid either. 

Adam Buick

Labouring in Vain (1995)

David Lange in 1984.

From the October 1995 issue of the Socialist Standard

For the benefit of those who might not have experienced a Labour
 government, last month we published an article on the record of the 
various Labour governments that have been in office in Australia 
since 1984. This month we look at what the Labour government 
that ruled New Zealand between 1984 and 1990 put the workers
 there through.

The New Zealand Labour Party came to power in 1984 and stayed there until 1990. Labour shocked its supporters, party members and most of its voters by following a path of financial market deregulation, cutbacks in public services, sales tax, users pay, corporatization and privatisation of a large portion of the state, removing industrial and agricultural subsidies, removing trade barriers, import restrictions, import tax and duties. None of which was outlined in its pre-election campaigns. By the end of Labour's 6-year rule, unemployment was at catastrophic levels, record numbers of businesses had failed, the state had been turned upside down, and many of Labour’s traditional supporters and party members had left the party in droves. The only people happy were NZ Treasury, richer capitalists and the National Party (NZ Tories).

Prior to the Labour Party victory in the snap general election of 1984, Robert Muldoon had been both Prime Minister and Finance Minister for all of the nearly nine years of National Party government in New Zealand. Due to the screwed up concepts of socialism many people have, Muldoon has gone down in “history'” as having instituted or continued so-called “socialist” policies in his time as Prime Minister and the Labour Government of 1984—1990 has been labelled “right-wing free marketeers”.

The “socialist” label attached to Muldoon is of course nonsense but used by some to describe Muldoon’s policy of reenforcing the state’s role as provider of support through social welfare, subsidies to exporters, tariff walls to protect inefficient local industries, and the investment of huge amounts of state capital in ambitious energy projects named “Think Big”. “Think Big” was aimed at making NZ at least 60 percent self-sufficient in energy and was largely motivated by the oil shocks of the 70s. It is worth noting that NZ enjoyed a prosperous period post second world war with England guaranteeing a market for NZ produce (meat, butter, wool) and high wool prices generated by the likes of the Korean war. It was the entry of England into the EEC, and an international decline in agricultural produce prices that resulted in successive NZ governments giving subsidies to farmers and borrowing overseas in the hope of riding out the unfavourable market conditions.

When it came to the snap election in 1984, NZ was under a wage freeze (a price freeze had just been lifted), inflation ranged from 6.1 to 15 percent during the year, the economy was described as “one of the most regulated, protected and subsidised in the developed world” (Europa World Year Book), unemployment stood at 66,500, public debt stood at $21.88 billion. The fixed exchange rate was clearly overvalued while politically government unity was disintegrating as Muldoon’s autocratic style drew fire from within and without, and the economic position of the country worsened.

The 1984 election was more than anything focused on Muldoon, and the cry from the as usually confused “left” was “out with Muldoon”, never giving a thought to what was to replace Muldoon. Not only the “left” wanted rid of Muldoon, feminists, homosexuals, liberals, civil right activists to name a few wanted him out. None gave a moment’s thought as to what actually made capitalism tick—or were the least interested in how the system operated. A significant portion of the capitalist class wanted Muldoon out as well, having their eye on the international investment capital that would flow in once financial deregulation occurred.

Power for power’s sake

Labour came to power in July 1984 with a 17-seat majority and total share of the votes of 43 percent (NZ operated a First Past the Post electoral system until recently). Its election policies centred on health, housing, employment, education, the economy, overseas debt and an anti-nuclear stance (though Labour leader David I.ange had opposed the anti-nuclear position when it came up for formal endorsement at the Labour Party conference, he later championed it as Prime Minister as if it were his own brain-child). The Labour Party had a great deal of assistance in the 1984 election victory from the newly formed New Zealand Party who had one of New Zealand’s wealthiest capitalist’s as its leader: Robert Jones, property tycoon. By drawing the protest vote with its so-called “traditional National Party policies”—votes that would otherwise have remained with National— Robert Jones helped achieve his objective—a Labour government and promptly wrapped the New Zealand Party up to the immense chagrin of its officials, This if anything should have given an unsuspecting public a clue as to what the new Labour government would be all about.

Even before the fourth Labour government resumed office it was confronted with a major balance of payments crisis and had to agree to a 20 percent devaluation of the NZ dollar. This decision was made on the advice of the NZ Treasury and Reserve Bank economic advisers where the Chicago School of Economic thought already dominated. (The Chicago School advocated removing state intervention and instituting laissez faire type economics). This set the tone for the rest of the Labour government term and was quickly followed up with abolition of exchange controls, deregulation of finance, abolition of subsidies and incentives and the floating of the NZ dollar. Within days, Lange was announcing the "cupboard was bare” and everybody should look to "tightening their belts ”. It soon became clear who was to be doing the belt-tightening and who would be letting the belts out. As the international capital flowed in, the local pigs were gorging themselves at the trough in a speculative frenzy that was to end up with the largest share-market and property crash in the history of the country in October 1987. Inflation was to peak at close to 20 percent in 1987.

Before and during the run up to the election in 1984, there was no indication from Labour that it would adopt such policies and its official economic policy was not much different from the conventional Keynesian style economics that both National and Labour had been following for decades. The Labour government therefore deliberately deceived the electorate and its own party supporters. Mike Moore—a cabinet minister and later Prime Minister told the Auckland Press Club that “had we talked about some of the things we did in 1984, we would never have got there (elected )”. A post-election remit of the Labour Party opposed free market policies; this made no difference to the course pursued by the Labour cabinet. So much for Labour Party democracy. There is little doubt that the Labour Party wanted power for power’s sake, and the conservative nature of the election campaign they waged reflected that.

Rogernomics

The Labour government finance minister Roger Douglas along with associate finance ministers Caygill and Prebble took on board the advice of Treasury. The economic policy enacted by the Labour government quickly became known as “Rogernomics” in the same vein as “Reaganomics”. The cabinet argued as a justification for their actions that their economic reforms would allow the fulfilment of the Labour Party’s social goals, even though no one ever defined the nature of these social goals. A similar argument is contained in the Treasury document Economic Management. “Users Pay” was a term that suddenly started slipping from Labour Ministers’ mouths and was meant to signify a new approach to providing services by the state, where the user of the service would be charged for at least part of the cost of the service.

In 1986, the State-Owned Enterprises Bill was passed through parliament. Lange and Palmer (deputy prime minister) denied when challenged that corporatization of many government departments would involve job losses and was a prelude to privatisation—they already had an eye to the approaching 1987 general election. Corporatizing government departments had never been a Labour Party policy. At the head of the new SOEs, the government placed leading business figures, many of whom were friends of the finance ministers. The SOEs’ boards of directors were supposedly accountable to Ministers (in a directors-shareholders style of relationship) and although the SOE Bill contained a section which enabled the Crown to pay the SOEs for non-commercial services this rarely occurred. The result of the implementation of the SOE Act was the loss of tens of thousands of jobs. With Alan Gibbs (businessman well known for his cabinet connections and backer of the New Right think-tank—the Centre for Independent Studies ) as chairman, ForestCorp (formerly the Forest Service) sacked the forestry work force and took some back as independent contractors.

The previously state owned Bank of New Zealand which has the largest share of retail banking in New Zealand had been partly sold (33 percent) by the Labour government in June 1989 amid pathetic cries of “they’re selling the family silver” from the likes of Pat Kelly—a long time trade unionist and Labour Party member.

By October 1990, $NZ13.7 million had been paid out by the government to private sector advisers employed in connection with sales of crown businesses.

The Lange Labour government introduced a supertax on the elderly. Extra income earned from savings or investments meant the old age pension was severely eroded by a surcharge tax. Of course while ordinary workers were being sacked in their thousands, mortgage interest rates at more than 20 percent, and workers were being asked to tighten their belts, parliamentary Labour in collusion with their fellow gutters in the opposition voted themselves a nice fat golden retirement package.

Government debt grew from $NZ21 billion in 1984 to nearly SNZ44 billion in 1991 despite state asset sales. Debt servicing grew from 10.6 percent of Government spending in 1980 to 15 percent in 1991. So much for the miracles of Rogernomics.

Unemployment over Labour’s term of office grew from about 60,000 to over 160,000 registered as officially unemployed. This had a particularly marked affect on female workers, despite the election of the Labour government being supported by feminists and the setting up of a Women’s Ministry. Unemployment figures are misleading, particularly in periods of high unemployment, as many married women or women living in partnerships are forced out of the workforce to be dependent on their partner, and so don’t show up in the official figures.

Labour disintegrates

Despite a show of unity during the first term of office from 1984 to 1987, and subsequent re-election on the back of a very slick TV campaign funded by taxpayer money and their nuclear ship ban (National was still opposed to the ban), Labour began to slowly fall apart.

The prime minister’s office in New Zealand has quite extraordinary powers and past Prime Ministers have used these powers to manipulate cabinet, sack hostile ministers and appoint friendly ministers without any endorsement needed from either cabinet or caucus. Lange was pretty much driven by cabinet and Treasury during the first term, in the second term, he opposed aspects of Roger Douglas’s budget that led to a falling out and eventual sacking of Douglas by Lange using the dictatorial powers of his office. Lange replaced Douglas with Caygill. Prebble was to follow soon after when he publicly criticised Lange’s ability as a Prime Minister.

A concerted campaign by Lange’s opponents led by Douglas and Prebble and ill health eventually resulted in Lange’s resignation. The deputy prime minister, Palmer replaced Lange as Prime minister but only for a few months before resigning in favour of Mike Moore. Moore and Labour lost the 1990 general election to the National Party (National had by then decided being anti-nuclear was a good idea) in what was a landslide victory, ending 6 years of Labour reign, a reign that devastated the very workers that Labour purportedly represented. National turned around and followed exactly the same economic policies only with more vigour, breaking virtually every single promise made during the election run-up. What Labour started, National finished.

Why did all this happen? And under a Labour government? Very logically. Property institutions under capitalism ensure that democracy can only be a veil, while underneath the vested interests that arise inevitably from a system of society based on production for profit, minority ownership and control of the means of production and distribution ensure that the interests of the majority—the workers— come last. The undemocratic nature of political parties such as Labour, government, companies and corporations are a reflection of this system and its need to subjugate workers in order to carry on fleecing them. Labour when faced with running capitalism became the manipulated.

The incredible thing is that rather than having learnt their lesson, many former Labour supporters have deserted the Labour Party to a party called New Labour— part of the Alliance (a political alliance of New Labour, Manu Motuhake, Green, and other minor parties)—with the same old failed formula, the impossible task of trying to run capitalism in favour of the workers.

Having become totally disillusioned with politics and politicians in general after being lied to and deceived, voters when faced with the choice of continuing with the First Past the Post electoral system and a Mixed Member Proportional system similar to the electoral system in Germany, turned to MMP. MMP means larger and fewer electorates, and a party list vote and is said to favour coalition style of government. Many workers are hopeful that this will result in fairer government. There is no evidence to support this, and the capitalist class and overseas investors seem far from concerned. Capitalism will merely adjust to the situation and workers will continue to suffer insecurity, pollution, poverty, violence and a life of drudgery and uncertainty. 

Dave Tildesley

World View: Japan's Tightrope Act (1995)

From the October 1995 issue of the Socialist Standard

"The Japanese economy is moving into recession following the banking crisis and credit crunch. Property prices are on the slide. Business bankruptcies are increasing” (Socialist Standard, November 1992).

When we warned of worsening prospects for the Japanese economy our view was a minority one. The consensus view expressed in the capitalist media was that by government intervention using tax cuts and increased public spending the economic slowdown could be reversed.

At the beginning of 1993 when signs of a developing trade war appeared, the conventional view was that negotiations among the world’s economic superpowers could settle their differences. We stated however "the present trade war cannot be ended by GATT. NAFTA, or G7 summits. It will, continue in one form or another as long as world production is organised for profit rather than use" (Socialist Standard, April 1993).

At the end of July this year Cosmo, Japan's fifth largest credit union (these are similar to our building societies) collapsed following the withdrawal by depositors of 60 billion Yen (£425 million). Cosmo which has 15.297 members admitted that bad debts were about ¥170 billion in May with interest in arrears on loans of ¥184 billion. The Bank of Japan was forced to lend Cosmo sufficient to cover the withdrawals. The Japanese Finance Ministry quickly produced a rescue plan to weaken the Yen and thereby boost exports and boost the economy. This consisted of intervention along with the US Federal Reserve to bolster the dollar. Japanese insurance companies will now be allowed to lend in foreign currencies. Accounting rules will be changed to "give Japanese insurers more flexible ways to account for foreign bond holdings and will also let them decide whether to report foreign exchange losses in their accounts . . . Such changes may help insurance companies out of their present fix but at the cost of making their accounts less transparent" (Economist, 5 August).

Banking crisis: Excessive lending in the 1980s is estimated to have left the country’s lenders with bad debts of ¥50,000 billion, almost £350 billion (Daily Telegraph, 1 August). Non-performing loans of Japanese banks, trusts and longterm credit banks at put at around ¥12 trillion (The Banker, July 1995). Problem loans, according to the Director of the Finance Banking Bureaux, amounted to about ¥40,000 billion (£290 billion) equal to almost 10 percent of Japan's gross domestic product (Financial Times, 7 July). In a recent speech the governor of the Bank of Japan stated that:

"the late 1920s Showa depression was triggered by the failure of a very small bank. The issue is not the size of the troubled institution but whether any unrest in the financial system could cause a chain reaction of deposit withdrawals throughout the system” (The Banker, July 1995).

Trade wars: These are not over. Following a last-minute compromise agreement over car imports into Japan from the United States, Kodak complained to the American trade authorities that the Japanese Fuji Film Company was obstructing Kodak’s access to the Japanese market. Trade wars ultimately have no victors. They can end in being extended to the battlefields.

The property bubble: Housing in Japan is estimated to be 19 times as expensive as similar properties in the United States and has been estimated at six times Japanese GDP. Cosmo quadrupled its lending in the space of two years by backing property developers. In December 1994, two other credit unions failed after their property-related loans turned sour (Economist, 5 August). Commercial property has fallen by 50 percent of its value since 1991.

Pension funds: Like other developed countries, Japan has an increasing number of aged people but on a scale that is larger than the UK and other European countries with rapidly increasing pension liabilities. The projected pay-outs have been based on assumptions made when the stock-market was far higher than at present and where commercial property values were booming along with their rentals. But in an economic environment where asset values are falling to a level that cannot cover the amounts borrowed against them the projected pension payouts become questionable. In short the welfare system in Japan is undergoing the same demise as it is elsewhere.

Unemployment: This has for the year 1994 increased to 2.94 percent

Interest rates: The recent cut in the Japanese discount rate to a record low of one percent in the hope of stimulating the economy and the stock-market has had no lasting effect. The Nikkei Dow has lost two-thirds of its value in the last five years. Japanese banks enter a large number of their share holdings at their acquisition value which means that with the fall in the Japanese stock-market they are worth less than the balance sheets imply.

Apart from the previous six attempts since 1992 to prop up the Japanese economy with tax cuts, public spending injections even to the extent of getting the postal savings institute to help by investing in the stock-market all have been of no avail. Why should this latest package of measures announced after the Cosmo collapse be anymore effective? Japan’s problems are deep-seated and long-standing. The present scenario is similar to the l929-30s in the United States.

Japan’s problems cannot be viewed in isolation from the rest of the world economy. A full-blown slump in Japan could have knock-on effect by disruption of capital flows if the Japanese overseas investors start withdrawing their assets from overseas. There is also the consequences of lessened demand for imports.

Once again the financial commentators are suggesting that Japan has reached a point where recovery is the only possible outcome of the recent rescue attempts by the Japanese powers-that-be. We have no hesitation in rejecting these arguments. The worsening problems described above are inherent to the capitalist mode of production. Credit crises, trade wars and the problems dealt with above are inevitable in a system where competing capitalist powers struggle for market dominance in their relentless drive for profit.

Terry Lawlor

Correction (1995)

From the October 1995 issue of the Socialist Standard

Although we have no objection to workers helping other workers suffering from some humanitarian catastrophe, we do not endorse particular organisations. We are therefore obliged to repudiate an article in issue No 5 of our Norwich Group's Newsletter which implied our support for the organisation "Workers Aid for Bosnia". This expressed an individual view and not that of the Group or the Socialist Party.

50 Years Ago: The Swindle of Nationalisation (1995)

The 50 Years Ago column from the October 1995 issue of the Socialist Standard

At present the means of production (land, factories, railways, etc.), are the private property of a small minority of the population, the capitalists. By virtue of their ownership they draw a large unearned income in the form of rent, interest and profit from the wealth produced by the working-class. The Labour Party's remedy for the poverty problem is (while leaving the greater part of capitalist, industry unchanged), to introduce a purely nominal change of ownership in certain industries that are to be “nationalised." Instead of receiving incomes in the form of dividend on shares in mining or railway companies the present owners will relinquish direct ownership and receive instead approximately the same capital and income in the form of Government stocks and the interest thereon, and the existing gross inequality of property and income will not be affected.

[From editorial in Socialist Standard, October 1945]